Savings accounts, certificates of deposit, and bonds pay interest and stocks pay dividends. Why does anyone hold on to currency or other forms of money and lose this extra income?
What will be an ideal response?
Money is more liquid than these other assets and this liquidity is often valuable. If one wants to purchase something, stocks cannot be used. The stock must be sold and payment to the broker must be paid. The transaction costs will be greater than the costs of holding the money balances.
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The field of economics is traditionally divided into two broad subfields,
a. national economics and international economics. b. consumer economics and producer economics. c. private sector economics and public sector economics. d. microeconomics and macroeconomics.
One of moneys primary roles in the economy comes from the use of money to transfer purchasing power to the future. This role of money is called
A. unit of account. B. standard of deferred payment. C. store of value. D. medium of exchange.